Huntsworth suffered in the early part of last year as twitchy clients switched from retainer business to less predictable project work. However, the trend has since gone full circle with record new business wins of £10m secured last month.
The public relations group took the step to rationalise its brands from 26 to four and the £8.8m cost of this exercise, as well as a £9.1m writedown of goodwill led to a swing into the red. The PR arm accounts for around three-quarters of sales and includes brands such as Grayling, Citigate and Red. Following the reorganisation, Huntsworth is now pitching for bigger contracts and is on the lookout for more £3m plus accounts. New business includes Airbus, Samsung and Lloyds.
Huntsworth is operating well within its banking covenants and estimates that even after paying out all outstanding earn-outs of £32.2m, it will be left with net debt of around £10m by 2013 due to good cash generation. So with its finances sound, and the recent acquisition of US lobbyist Dutko proving a success, the company is on the lookout for further deals to bolster its range of services.
KBC Peel Hunt forecasts 2010 adjusted pre-tax profits of £27.1m and EPS of 8.4p (£23.3m and 7.9p in 2009).
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HUNTSWORTH (HNT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 64.5p | MARKET VALUE: | £149m | |
| TOUCH: | 64-65p | 12-MONTH HIGH: | 84p | LOW: 38p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | na | |
| NET ASSET VALUE: | 84p* | NET DEBT: | 25% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 108 | -32.9 | -20.9 | 1.7 |
| 2006 | 140 | 4.0 | 1.5 | 1.9 |
| 2007 | 152 | 10.8 | 5.9 | 2.5 |
| 2008 | 159 | 20.1 | 4.8 | 2.7 |
| 2009 | 156 | -9.8 | -4.2 | 2.9 |
| % change | -2 | - | - | +7 |
Ex-div: 26 May Payment: 2 Jul *Includes intangible assets of £287m, or 125p a share | ||||
